What the Net Neutrality Filings Say

The Federal Communications Commission has received 23,137 filings and more than 100,000 comments on its proposed net neutrality rules, which would prohibit both wired and wireless Internet service providers from discriminating against the content flowing across their respective pipes. They range from “form filings” that were solicited by the Free Press’ Save The Internet campaign, to a 255-page tome submitted by AT&T.

Over the next few days I’ll dig through more comments, assimilate information and come up with more articles, but for now here’s a quick snapshot. I’m acutely disappointed that what was supposed to be a “data-driven” process has produced so little data, and instead churned out hundred of pages of philosophical and legal arguments.

The NPRM proposes all this new regulation, moreover, without any credible data-driven evidence of any market failure amid this robust competition. Instead, it bases its hyper- regulatory proposals solely on the basis of speculation that a market failure might arise someday in the future. This speculation rests on three deeply flawed premises: (1) that the Internet has always been a collection of “dumb pipes” that cannot distinguish among packets based on their associated applications or content; (2) that “[a]s a platform for commerce,” the Internet therefore “does not distinguish between a budding entrepreneur in a dorm room and a Fortune 500 company”; and (3) that only recently have new “[t]ools” emerged “that enable network operators to prioritize” particular data and that somehow threaten the Internet’s historic openness and “neutrality.” This threat, the NPRM posits, demands immediate, preemptive intervention.

To minimize the damage to the continued growth and potential of the Internet, the Commission should limit any enforceable obligations to the four principles set forth in the Policy Statement, along with the proviso that permits reasonable network management – a proviso that, as proposed in the Notice, should be construed much less restrictively than in the Comcast decision. The addition of enforceable nondiscrimination and transparency principles would, unless very carefully tailored, seriously impair consumer welfare in the development of Internet services.

First, if the Commission decides to adopt formal Internet regulations, it should limit such regulation to the first three principles of the Internet Policy Statement. This would address all of the hypothetical concerns that have been raised by various proponents of regulation, [ed. note: I find it awesome that Comcast is calling these threats hypothetical after it blocked P2P filings] with minimal disruption of the status quo. The Commission, however, should not adopt the fourth principle as a rule. It is a laudable goal to state that a broadband ISP “may not deprive . . . users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers,” but the concept is too vague and is ill-suited as an enforceable regulatory standard. Rather, this principle should be retained as an overarching, aspirational policy goal for the entire Internet ecosystem.

While regulatory oversight targeted to last-mile broadband providers is consistent with regulatory precedent and the Commission’s statutory mandates, the FCC’s authority does not extend to most web overlay applications and services. These software-derived offerings are not associated with either the network provider’s transmission functions or the source of potential FCC concerns, i.e., affecting the facilities of communications by wire or radio. 254 The FCC has broad authority to regulate communications in the public interest, but the Supreme Court has made clear that its jurisdiction is not unlimited.

In markets where technological change is relatively swift and competition is healthy, firms have a strong incentive to invest in order to keep up with or get ahead of their competitors. The current high-speed ISP market is characterized by swift technological change, but the overall level of competition is sub-optimal. The latter factor means that regulators must be vigilant to ensure that the lack of competition and presence of market power do not spill over from the ISP market into the adjacent content and applications markets. If ISPs are allowed to discriminate against content and applications, it will create incentives for them to profit from artificial scarcity by delaying or avoiding network investments — and it will reduce investment in the content and applications sector.